As one of the UK’s leading food and packaging communications agencies we’re constantly looking at the trends that will affect food marketing and packaging PR.
So, during the last few weeks of 2016 we’ll be making our predictions about the 2017 trends that will affect food producers and processors, packaging and distribution companies as well as grocery and foodservice in the year ahead.
In the second of the series we look at the effects of food inflation. Look out for further instalments of food marketing and packaging PR predictions.
The effects of food inflation on food marketing and PR
The weaker pound has already increased the cost of many of the food industry’s input costs. Apart from the obvious impact this will have on food prices, it’s also going to affect pack sizes, boost categories like frozen and have a knock-on in foodservice.
Smaller packs: Portions sizes will get smaller but prices will remain unchanged or will increase.
More expensive ingredients are already forcing brand owners to reformulate or repackage items. Toblerone recently took the decision to space out the distinctive triangular chocolate chunks in two Toblerone bars sold in the UK. The product’s makers, US-based Mondelez International, said it had changed the design to reduce the weight of what were 400g and 170g bars.
The move has resulted in the weight of the 400g bars being reduced to 360g and the 170g bars to 150g, while the size of the packaging has remained the same.
It has also been reported that Birds Eye is considering cutting the number of fish fingers in a pack – for example from 12 to 10 or 20 to 18. The move comes as brands struggle to get to grips with the falling pound, following the UK vote to leave the European Union. Birds Eye is said to be asking supermarkets for price rises of up to 12%. PepsiCo-owned Walkers is also said to be seeking prices rises of 5-10%. A 32g bag of crisps could go up from 50p to 55p.
However, this is not a new phenomenon, consumer group Which? highlighted the trend earlier this year claiming that many supermarket items such as toilet rolls, chocolate biscuits and orange juice had shrunk in size while their price was unchanged.
Which? researchers found that Andrex had cut the number of sheets on its standard toilet rolls from 240 to 221 sheets – an 8% fall. The price had remained roughly £2 for four rolls. McVitie’s dark chocolate digestive biscuits had dropped from 332g to 300g, a reduction of more than 10%, and the Tesco price had risen from £1.59 to £1.69 afterwards. Whilst Tropicana Creations Pure Premium orange and raspberry juice decreased from 1 litre to 850ml, a 15% reduction, yet it had remained at £2.48 in Asda.
This trend will create major reputational issues for brands, who may lose consumer confidence and loyalty unless the changes are communicated openly and honestly.
Own label and frozen will grow: consumers will reassess frozen and own label as price pressures increase.
Another effect of food inflation will be an even greater focus on value. Aldi and Lidl have already proved they can deliver on quality and price. The pressure on the Big Four will continue as consumers continue to seek better value. This will create opportunities for sectors such as frozen food which has traditionally benefited during periods of economic difficulty. The innovation being demonstrated by many frozen manufacturers may mean consumers continue to stick with frozen when price pressures ease.
This trend is also an opportunity for the Big Four to regain market share from the discounters, especially if they can offer own label products that match the quality and price points offered by Lidl and Aldi.
Foodservice under pressure: Consumers will continue to eat out but less often.
Whilst many sections of the foodservice market are growing more quickly than retail, they will not be immune from food inflation.
During the financial crisis people continued to eat out but reduced their frequency. This trend is likely to be repeated, although less dramatically. This presents opportunities for outlets that emphasise value such as kids eat free or two-for-one deals.
It also offers opportunities for the retailers with a likely surge for ‘Dine In’ deals. Aldi is already making a play for this market, offering shoppers a chance to pick up a main meal, side dish, dessert and drink for less than £8.
As reported by The Grocer: the deal is currently only available in Aldi’s smallest store in Tooting, the range is merchandised together for a mix and match, meal for tonight mission, in chillers at the end of an ambient aisle.
Expect to see: less for more, tough competition for every pound spent, single Twix.
Pelican Communications are specialists in the environment, food and drink, outdoor and leisure and packaging sectors and offer a range of services such as media relations, brand management, event management and people development. Contact us for marketing and communications expertise.